A recent case highlights the overbilling of Citibank mortgage default fees. Citigroup has agreed to settle with five of the largest mortgage servicers for $2.22 billion. The OCC also fined Cenlar $400 million for its debt-collecting methods. Read on to learn more about the case and what can happen if Citibank is found liable. This lawsuit will be heard in the San Francisco federal court on May 17.
Citigroup agrees to pay $2.22 billion to settle with five big mortgage servicers
In a press release, the Justice Department announced that Citigroup had agreed to pay $2.22 billion to settle civil claims filed against it involving mortgage loans. The settlement resolves claims filed against Citigroup before Jan. 1, 2009. It also includes a $4 billion civil penalty, the largest under FIRREA to date. Citigroup admitted to making numerous material misrepresentations to the public, and the agreement does not absolve its employees of any criminal charges.
While the settlement will relieve the company of potential liability, Citigroup did not resolve the criminal charges against the bank’s executives. The Attorney General’s Office has not said whether it will continue to pursue criminal charges against Citigroup executives. In addition, the settlement only affects Citigroup shareholders, not its executives. However, the settlement does help the companies in their bottom line.
OCC imposes a $400 million civil money penalty
The OCC has imposed a $400 million civil money penalty on Citibank, N.A. for failing to properly manage compliance risk, data governance, and internal controls. The OCC also issued a cease and desist order, requiring the bank to seek non-objection before any significant acquisitions. Further, the OCC reserves the right to impose additional business restrictions.
Heymans’ Second Amended Complaint asserts eight causes of action against Citi. Heymans claims that Citi violated the New Jersey Consumer Fraud Act, promissory estoppel, and negligent misrepresentation. The OCC found that the bank discriminated against the borrowers based on race, national origin, and sex. In addition, the complaint also alleges that the bank charged late fees and appraisal fees that exceeded the amount of their monthly gross income.
Citibank charged excessive fees for inspections
In a new mortgage default lawsuit filed in Manhattan federal court, a Citibank unit is accused of charging borrowers for unnecessary inspections and driving them deeper into foreclosure. The lawsuit alleges that Citibank charged excessive fees for these services and hid the actual nature of the fees behind vague descriptions. The bank’s loan management system allegedly ordered the inspections without telling borrowers they were unauthorized and marked up.
Several recent court cases have found that Citibank charged borrowers excessive fees for inspections, late fees, and other services. But in a previous lawsuit, the same bank was found to have improperly charged more than $200,000 in fees for the same inspections. Likewise, Citibank was fined $500,000 in 2011 for the same charges and also faced lawsuits from the Consumer Financial Protection Bureau and House of Representatives subcommittee.
Cenlar’s debt-collecting means are unlawful
We’re astonished that Cenlar’s debt-collector practices were found to be illegal. Despite its “rocket docket” and Judges claiming to run the fastest Federal Court in the country, Cenlar’s debt-collecting methods were unconstitutional. By the summer, Cenlar will have to explain itself in detail, and it may have come up with another excuse.
As the nation’s leading mortgage loan servicing company, Cenlar has engaged in debt collection practices for nearly 40 years. Christine and Matthew received a bill from Cenlar in 2008 despite having thought they had settled their second mortgage. After Cenlar’s practices, they filed a class action lawsuit to recover damages. The lawsuit claimed that Cenlar had harassed them with repeated phone calls and harassed them. They eventually settled with the plaintiffs.
Citibank misrepresented contractual authority
In the Citibank Mortgage Default Fee Lawsuit, the plaintiffs claim that Citicorp breached its contractual authority by misrepresenting the cancellation policy and the assignment of mortgage insurance. The plaintiffs say that Citicorp did not tell them about the assignment or their permission to cancel PMI until they were reading a newspaper article about the lawsuit. That is not only wrong, but it violates state law.
The complaint was filed by the United States Attorney’s office in the Southern District of New York against Citibank and its subsidiary CITIMORTGAGE, a subsidiary of CITIBANK, N.A. The complaint seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform Recovery and Enforcement Act. The misconduct spanned over six years and involved loans under the federal housing administration’s direct endorsement lender program.